Restriction on set-off of loss from House property [Finance Act 2017]

From FY 2017-18, the Tax benefit on loan repayment of second house is restricted to Rs 2 lakh per annum only (even if you have multiple houses the limit is still going to be Rs 2 Lakh only and the ceiling limit is not per house property).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of the cases, this can be treated as ‘dead loss‘.

I believe that this is a major blow to the investors who have bought multiple houses on home loan(s) with an intention to save taxes alone.

Until FY 2016-17, interest paid on your housing loan is eligible for the following tax benefits ;

Municipal taxes paid, 30% of the net annual income (standard deduction) and interest paid on the loan taken for that house are allowed as deductions.

After these deductions, your rental income can be NIL or NEGATIVE and is called ‘loss from house property’ in the latter case.

Such loss is currently allowed to be set off against other heads of income like Income from Salary or Business etc. which helps you to lower you tax liability substantially.

Restriction on set-off of loss from House property [Finance Act 2017]